Is the same dream of flying to a foreign land to pursue your higher education hitting you every night? Are you trying to reach your favourite study abroad destination by hook or crook? Just how some Bollywood movies that inspire us to do what our heart says, we follow their path, without realising the practicalities of our dream. When dreaming of studying abroad, the biggest hurdle that comes in the way of most students is their tuition fee. But, that’s just one part of the list of expenses you’ll incur. Are you forgetting your living expenses, transportation, insurance, utilities and other expenses? In situations like these when the financial mountains keep you stressed, the concept of education loans enters the chat. Education loans can be your chauffeur-driven car to your dream university in the country of your choice. Now, that you see a green light to fulfil your study abroad dreams, lets dive deep into the concept of education loans for studying abroad.
Loans vs liquidating your savings
When it comes to securing a child’s future, parents ensure no stone is left unturned. From taking care of his every need to making sure he gets the best education, parents extend full support. When the child hits the age of receiving higher education, whether in India or abroad, the first thought in the parents’ minds is liquidating their savings, which they saved since so long for their children. How would you feel if we tell you a secret means of studying in your favourite country and not bothering your parents’ savings? How’s that possible? Well, education loans! From tuition fees to living expenses to airfare for study abroad students, and so on, education loans are a self-made badge that cover all these expenses, keeping your parents’ savings intact for future. They make your whole academic journey stress-free, not just for you but for your parents too.
Indian students can opt for two types of loans based on feasibility, income and credit history.
- Secured Loan: A secured loan would require you to provide collateral (assets, liquid securities) as a security against the amount borrowed as education loan. You can apply for a secured loan from the comfort of your home. Due to the collateral, the interest rates of this type are low and has flexible repayment terms.
- Unsecured Loan: An unsecured loan eliminates the requirement of collaterals and instead relies on the borrower’s creditworthiness and the student’s employability potential. The interest rates of this type are high as compared to a secured loan and have a shorter repayment tenure.
Study Abroad Loans: Eligibility, Documents required and Application Process
Education Loan Eligibility in India The following factors are a mandate to be eligible to apply for an education loan in India:
- The applicant must be an Indian national.
- The applicant or the co-borrower (parent or spouse) must have a bank account in any bank in India.
- The applicant must possess a strong academic record.
- The applicant must have an acceptance letter from a recognised university or college abroad.
Documents Required for an Education Loan The following documents are required for a study overseas loan in India:
- Loan Application Form
- Academic documents (transcripts and standardised test scores)
- Identification and related documents (KYC, Aadhaar card, PAN Card, birth certificate)
- Income proofs and bank statements
- Residential proof
Application Process: The education loan application can be filled out both offline and online. In both scenarios, the applicant is required to submit the application along with the required paperwork, post which the lender contacts the applicant and proceeds with the loan application.
Banks Offering Study Abroad Loans
Mistakes to Avoid while applying for a Study Abroad Loan
- Inadequate Research: Failing to research thoroughly about different loan options can lead to selecting a less favourable loan. Compare interest rates, loan terms, and benefits from various lenders to find the best fit for your needs.
- Ignoring Eligibility Criteria: Each lender has specific eligibility criteria, such as academic performance, the course being pursued, and the institution’s recognition. Ignoring these can lead to rejection. Ensure you meet all the requirements before applying.
- Overlooking Hidden Costs: Apart from the principal and interest, loans can come with various hidden costs like processing fees, prepayment penalties, and late payment charges. Understand all costs involved to avoid unpleasant surprises later.
- Not Considering Repayment Terms: Repayment terms, including the moratorium period and EMI structure, are crucial. Some loans may have higher EMIs or shorter repayment periods, which can strain your finances. Choose a loan with flexible and manageable repayment terms.
- Incomplete Documentation: Incomplete or incorrect documentation can delay your loan processing or even lead to rejection. Ensure you have all necessary documents, such as admission letter, identity proofs, and financial statements, properly organised and verified.
- Delaying the Application: Waiting until the last minute to apply for a loan can cause unnecessary stress and might not leave you enough time to secure the best loan. Start the application process well in advance to ensure you have enough time to handle any issues that may arise.
Benefits of Education Loans for Abroad Studies
- Encourage financial independence: When a student manages his finances, it prepares him for future financial planning. Moreover, timely repayment helps build a good credit score, beneficial for future financial endeavours.
- Covers a wide range of expenses besides tuition fees: Education loans for abroad studies not only cover your tuition fees, but also your accommodation, travel, living expenses and other educational costs. Some loans also cover health insurance and study material, ensuring students have all necessary resources.
- Reduces strain on parents: Parents can retain their investments and savings for other important needs and don’t have to compromise on their financial stability to fund their child’s education.
- Freedom to pay post-education: Many education loans offer the option to start repayment after completing the course and securing job, reducing immediate financial pressure. Some banks also provide a grace period or moratorium, allowing students to focus on their studies without worrying about repayments.
So, there you have it- the ultimate lowdown on study abroad loans! You are now armed and ready to conquer the world, one lecture at a time. Remember, your dream of studying at that fancy university isn’t as far-fetched as it seems. With the right loan and a bit of savvy planning, you’re on your way to becoming the next big thing. And hey, don’t stress! At Lorien Finance, we’ve got your back every step of the way. If you need more deets, or just want to chat about your options, our expert counsellors are always here. Let’s turn those study abroad dreams into reality!
